Poverty: the real economic score
The real score on the economic state of the Filipino people is given by the trend in the proportion of families who are poor, and not by the rate of growth of the Gross Domestic Product. It is an empirical fact that the correlation of poverty with GDP is very weak, i.e., the growth of GDP has not been inclusive.
Regular national statistics on Philippine poverty are available from either the National Statistical Coordination Board or Social Weather Stations. The trends (meaning, the changes over time) in poverty of these two sources are consistent with each other. Their magnitudes of poverty are different because the former uses an official, money-valued, poverty line, whereas the latter uses the self-rating approach. But the top-down and the bottom-up approaches to define poverty are equally valid means of discovering its trend.
The practical distinction between the two sources is that NSCB figures have come out only every three years, starting in 1985. As of now there are exactly 10 data points in the official series, namely 1985, 1988, 1991, 1994, 1997, 2000, 2003, 2006, 2009 and the first semester of 2012. In the first semester of 2012, the families below the official poverty line were 22 percent. Because of this infrequent measurement, for a long time—before 2003, that is—it was thought that poverty declines slowly but steadily. From 2003 onward, the official trend is flat.
The advantage of the bottom-up approach is that it requires relatively few survey questions and thus can be implemented at a low cost. The basic technique is to ask the head of the household to point to where the family belongs on a card with the word “mahirap” on one end, separated by a line from the words “hindi mahirap” on the other end. This results in three categories, since some respondents point to the border line itself.
Self-rated poverty was first surveyed nationally in 1983 and in 1985. The SWS surveys were semiannual in 1986-1991, and then quarterly from 1992 to the present. The frequent surveying of poverty led to the discovery that it can change significantly even over as short a period as one quarter.
his week, SWS released its poverty report for the third quarter of 2013, which shows families rating themselves as mahirap or poor to be 50 percent as of last September, or almost the same as the 49 percent of last June (BusinessWorld, 11/4/2013; full charts and tables are in www.sws.org.ph).
The annual average percentage of the self-rated poor has fluctuated between 49 and 54 from 2004 to the present. It had ranged from 57 to 63 percent in 1995-2003. Before that, it was 65 percent or more, and had peaked at 74 percent in the hyperinflation of 1985. The one great exception was 1987—a year of zero inflation in consumer prices, which turned out to be short-lived—when self-rated poverty was only 47 percent.
Econometric analysis of the plentiful quarterly data has shown that general inflation and food-price inflation are the most important determinants of the movements in poverty, followed by underemployment, and then unemployment, whereas growth in GDP has hardly mattered at all.
In the SWS surveys, the respondents who rate their families as mahirap are then asked how much is the monthly budget they would need for home expenses in order not to feel that way. Home expenses specifically exclude any regular occupational expenses, such as transportation to and from the workplace. The responses are called self-rated poverty thresholds. They vary realistically, according to family size and location.
In any particular location, the median poverty threshold is the amount sufficient to satisfy one-half of the poor. As of September 2013, the median self-rated poverty threshold was P15,000 per month in the National Capital Region, P10,000 per month in both the Balance of Luzon and the Visayas, and P9,500 per month in Mindanao. In these areas, how many workers presently earn enough to provide their families with at least these amounts of money for a monthly home budget, after allowing for their occupational expenses?
SWS also uses the bottom-up approach to obtain food-poverty, by asking heads of households to rate the quality of their food as either poor, borderline, or not-poor, with the help of the same rating card. In September 2013, the percentage of the food-poor was 37 percent, compared to 40 percent in June 2013. Food-poverty, like general poverty, has also been relatively flat for several years, with its annual average at 43 percent or less ever since 2004. In previous years, the annual average had been at least 45 percent, and often reached well over 50 percent.
The food-poverty threshold is the minimum amount of money the family needs for its food budget in order not to regard its food as poor. The median is what would satisfy half of the food-poor families. In September 2013, this median food threshold was P8,250 per month in the National Capital Region, P5,000 per month in both the Balance of Luzon and the Visayas, and P4,000 per month in Mindanao. In these areas, how many workers presently earn enough to allow their families at least these amounts of money to spend for food?
For the Filipino people, the real economic score is the state of their poverty, however measured. The GDP, the stock market index, the credit ratings of the government, and the peso-dollar exchange rate are all comparatively unimportant.
* * *
Contact SWS: or [email protected].
